RigCo, a wholly owned subsidiary of Keppel, has recently begun its collaboration with Seatrium to complete the construction of four old offshore rigs. This collaboration comes at a time when demand for offshore drilling has increased due to energy security concerns and the aging of the global fleet.
Details of the RigCo and Seatrium Collaboration
The two companies will complete the construction of four offshore rigs owned by Keppel's subsidiary under a main service agreement. These rigs include a seventh-generation drilling vessel, a jack-up rig for harsh conditions, and two semi-submersibles designed for operation in the most challenging environments of Northwestern Europe.
Cindy Lim, CEO of Keppel's Infrastructure Division and a non-executive member of RigCo, stated: "Demand for deepwater and harsh-condition rigs will increase in the coming years, creating opportunities for long-term leases of high-quality rigs." This collaboration aims to transform the rigs under construction at RigCo into high-quality, revenue-generating assets.
Financial Implications and Future Outlook
The total contract value for the construction of the four mentioned rigs is estimated to exceed 500 million Singapore dollars, and this cost will be covered by the existing liquidity at RigCo. RigCo also has six modern jack-up rigs that have been leased to customers since 2022.
The delivery of the drilling rig and the jack-up rig in harsh conditions is scheduled for 2027 and 2028, respectively, to Keppel's subsidiary. These rigs will be ready for lease and will facilitate the financing process through Keppel's marine fund.
William Guo, Executive Vice President of Seatrium Energy, said: "Seatrium has a long and distinguished history in the design and construction of high-specification offshore rigs. This contract demonstrates our capabilities in delivering complex projects safely and to the highest quality standards."
With the increasing need for energy security, the resumption of rig construction is expected to create value for both companies. RigCo emphasizes that the fundamentals of the offshore rig market are improving due to higher utilization rates, the aging of the global drilling fleet, and structural supply constraints.
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